BRITAIN has finally pulled out of recession - but only just. In the last three months of 2009 our economy expanded by a tiny 0.1%.

After an 18-month recession - with our national wealth falling by over 5% - the economy remains in a very fragile condition.

The Government and the Bank of England have done everything to keep our economy afloat. The base interest rate is almost zero, extra money is being pumped into the system and our currency has devalued making it easier to export goods. Most dramatically, the Government is borrowing an extra £500 million every single day.

This situation cannot continue indefinitely. Britain has to cut its enormous spending deficit, but the delicate state of our economy means some very difficult economic and political judgements will need to be made.

If we carry on spending more than we can afford we will go bust. It will get harder for the Government to keep borrowing, interest rates will rise, and we will run out of money to fund services like schools, hospitals and the police.

But if all the support for the economy is withdrawn too quickly the country may sink back into recession again, with businesses collapsing, tax revenue falling and higher unemployment. That would also mean we run out of money for key public services.

My view is that Britain needs a credible deficit reduction plan, which will involve making some serious savings, but we must tread carefully and not withdraw the extra support for the economy too quickly or too soon.

At the moment Britain's economy still resembles a critically injured person in intensive care. We cannot switch off the life-support machine until we are sure that the patient is alive.